MyHouseValue.com

SOURCE : NATIONAL ASSOCIATION OF REALTORS

Help is on the way for many homeowners who are facing foreclosure, thanks to new details under the Making Home Affordable Program announced today by the U.S. Treasury and the U.S. Department of Housing and Urban Development.

The Making Home Affordable Program is designed to help homeowners obtain modifications to their loan so they can afford to stay in their home. Where a modification is not possible, new incentives encourage the “quick private sale or voluntary transfer of property, which will save homeowners money and protect their financial future,” according to U.S. Treasury Secretary Timothy Geithner. The National Association of Realtors® expects that a uniform process for handling short sales and financial incentives will facilitate this process. View a summary of the incentives and process (PDF)

“NAR is pleased that the government is stepping in to help prevent foreclosures by streamlining the short-sale and deeds-in-lieu process,” said NAR President Charles McMillan, a broker with Coldwell Banker Residential Brokerage in Dallas-Fort Worth. “NAR has been calling for uniform short sales procedures and other initiatives that will help today’s homeowners in challenging economy.”

Short sales occur when a bank agrees to let homeowners who have fallen behind on their mortgage to sell their home for less than they owe on their mortgage. Visit www.treasury.gov for detailed information on the program changes.

“Many families are finding themselves with a mortgage that is higher than their current home value, and they are struggling,” said McMillan. “As Secretary Geithner noted, and as NAR has been advocating for many months, stemming the foreclosure crisis and stabilizing the housing market are critical to our economic recovery.”

“We have heard from Realtors® that the extensive delay in the short sale process had caused many buyers to go elsewhere and have left many would-be sellers with no option but foreclosure. We are all pleased that the government has stepped in to help homeowners and those wishing to buy a home,” McMillan said.

The National Association of Realtors®, “The Voice for Real Estate,” is America’s largest trade association, representing 1.2 million members involved in all aspects of the residential and commercial real estate industries.

Bank of America Revises Short Sale Policy

Bank of America, one of the country’s largest mortgage lenders, says it is loosening its policies on short sales in response to the U.S. Treasury Department’s announcement last week that it would increase incentives for lenders to work out short sale deals.

The government’s plan is a boon to banks, says David Sunline, BofA’s real estate management executive, because it provides guidance when there are multiple liens, a potentially litigious issue for lenders.

In the past, the bank followed Fannie Mae’s policy of giving second lien holders about 10 percent of the second mortgage balance in a short sale. Now when it holds the second lien, BofA will accept 5 percent of the net proceeds of the short sale, Sunline says. When it is the first lien holder, it will offer 5 percent to the holder of the second lien.

Sunline says home owners considering short sales should contact the bank within five days of getting an offer on the home and expect its cooperation as long as the offer is within the range of other sales in the area and the borrower can demonstrate financial hardship.

Source: The New York Times, Bob Tedeschi (05/15/2009)